Board Pulls Back On Pay For UTC Chief Who Made $19.5M Last Year

Louis R. Chenevert, chairman and chief executive of United Technologies Corp., made $19.5 million in 2012, a period when he led the company through a broad restructuring and closed on its acquisition of Goodrich Corp.

Almost two-thirds of Chenevert's package comes from the exercise of $12.6 million of previously-awarded stock options and stock awards that vested in 2012.

Though the pay package increased from 2011, the company's board moved to lower the long-term incenstives Chenevert's received in January 2013. The change is in response to a lukewarm say-on-pay vote by shareholders in April 2012 when only 61 percent approved of the company's executive compensation plan.

The result lowered Chenevert's long-term compensation and moved him into the 50th percentile for that category among executives at similar companies, down from the 65th percentile. The board also cut his bonus by $1 million.

"As a result of these actions, Mr. Chenevert's target total direct compensation is now approximately at the median of the market," the company said in a shareholder proxy released after the stock market close on Friday.

In addition to the package, Chenevert was issued stock options and stock awards, now valued at $14.8 million. The ultimate value of the options will depend on how well the company's stock performs; the stock will only be awarded after a vesting period if UTC meets certain financial performance targets.

The company's board gave Chenevert's 2012 performance a "highly favorable assessment." He closed on the largest aerospace acquisition ever, transformed how the company's business units are organized, sold a number of its businesses, and acquired the rest the shares of its International Aero Engines partnership with Rolls Royce.

"Portfolio transformation was the single most significant factor underlying the Committee's favorable assessment of CEO performance in 2012," the board wrote.

The board's sentiment about Chenevert seemed to be shared on Wall Street. As the company beat earnings targets, the stock price rose 12.2 percent over the calendar year.

Chenevert's compensation last year rose 27 percent from 2011 when he made $15.3 million, mainly because of vesting of stock awards and previously awarded stock options.

The Courant calculates compensation as the sum of salary, bonus, value exercised from stock options and vested stock awards, plus other forms of direct pay, such as incentive payments and personal use of corporate aircraft.